What is the difference between "Allowed Amount" and "Co-pay" on an Explanation of Benefits?

I've been seeing a therapist for about a year. Last year my co-pays were $20 per session. I knew that the co-pays could increase this year with the advent of the Affordable Care Act, but I did not receive any notification from my insurer and have continued to pay my therapist $20 per visit. Today I got an EOB from my insurer listing all of my visits since the beginning of the year and each visit is broken down like this:

My question: Why do I owe $40 per visit if my co-pay is $40? It seems like they are saying my co-pay is $60 and I've paid $20 towards that and now owe $40. If my co-pay is $40, wouldn't I only owe an additional $20 per visit?

If it matters, my therapist is in-network and I have $0 deductible for in-network providers.

Your therapist billed your health insurance company $100. Because your therapist is in-network, your insurance company has previously negotiated a rate with your therapist for $60. The insurance company requires the therapist to cover the residual $40 (aka, the therapist only gets reimbursed for the negotiated rate, not the billed rate). Of the $60 that the therapist is "allowed" to charge, you immediately pay the co-pay ($40) and then your insurance kicks in. Because you have $0 deductible for in-network providers, the insurance covers some portion of the residual $20. Per the "co-insurance" segment, your insurer does not require you to pay any of the charges above the ($0) deductible, so the insurer would cover the remainder of the appointment ($20 above the co-pay).

My guess is that the "you owe" section is a total amount owed, in which case it is correct, rather than a "remainder owed".

PS - It sounds like you have pretty good health care. Congratulations.posted by saeculorum at 10:14 PM on March 10, 2014

"Paid" means paid by the insurance to the provider, they have no idea that you already paid $20.
Your therapist charges $100
The insurance only allows the therapist to collect a total $60 (allowed amount)
The therapist has to eat the difference (provider responsibility)
You have a co-pay of $40
The insurance pays the difference between the copay and allowed amount $60- $40 = $20
So your share is the co-pay of $40 (you owe) Since you already paid $20 of that, you actually owe the therapist another $20.

It is just coincidence the amount you paid already is also the amount that the insurance company is paying on the claim.posted by metahawk at 10:14 PM on March 10, 2014 [4 favorites]

I'll give the same answer but in the simplest possible terms:

The co-pay is the amount that you owe for that type of visit.
The allowed amount is the amount your insurance is being charged.

"Charges" is the amount your therapist would charge a patient who does not have health insurance and can afford to pay. The therapist always bills the insurance company for this amount.

"Allowed Amount" is the rate that your insurance company has previously negotiated with your therapist. This is the amount that he or she has agreed to charge a patient who has health insurance through your insurance company. Insurance companies require such an agreement with any provider in order for them to be considered "in-network." (Sometimes out-of-network providers agree to this amount too, for example, if an in-network doctor takes blood in their office but sends it to an out-of-network lab, sometimes the out-of-network lab agrees to take the in-network charges. But that's irrelevant to this question.)

"Provider Responsibility" is the difference between the "Charges" and the "Allowed Amount." Your therapist has agreed to lose this amount from patients who have your health insurance.

"Copay" is obviously your copay. Looks like it's doubled, to $40.

"Paid" is how much the insurance company paid your therapist.

"You owe" is how your insurance company thinks you owe. They have no idea you've already paid $20. So you still owe $40 - $20 = $20 for each appointment. In the future you should be paying your therapist $40 per session.posted by tckma at 6:53 AM on March 11, 2014

Other posters have covered the "Copay" vs "Allowed Amount" in the exact way I understand it, so I won't add anything else there.

I did want to point out that typically my EOBs state somewhere in large print that "THIS IS NOT A BILL, IT IS ONLY AN EXPLANATION OF YOUR BENEFITS" or something like that. The insurance company doesn't bill you directly, they deal with the provider who is then responsible for getting you to pay them the co-pay. So the "You owe" amount of $40 is listing the total amount you owe your provider for the visit, but it's not any kind of bill for $40. On your therapist's end, their billing department will have received the $20 per visit you have already been paying, and at some point you should receive a bill from them for the other $20 per visit that you still owe. You should be able to contact your therapist's billing department to find out for sure, as well.posted by augustimagination at 9:34 AM on March 11, 2014 [1 favorite]

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